Ουδεν κακο αμιγες καλου
Ελευθεριος Ν. Μποτσας
For both Greece and the European Union the Greek financial crisis has been a God-sent blessing. For a short time it appeared that the Greeks had lost their philotimo and the EU partnership. At least that’s what German legislators and government officials implied with their continuous assaults on the Greekness of the Hellenes.
Following his meeting with the Hellenic Prime Minister in Brussels on March 17, José Manuel Durão Barroso, President of the European Commission, said:
“I want to say to the Greek people that these efforts are needed, not to please Brussels or the European partners –or the markets– but first and foremost for the future of Greek pensions, Greek public services, the financing of schools and hospitals, to invest in new sources of economic growth and for the prosperity of Greece and its people. I want to stress that our rules and the Euro are there to help not hinder getting Greece back to track.” It is interesting that he said nothing about the rules that hinder the whole operation of the EU. Then on March 19, Mr. Barroso declared: “we cannot prolong any further the current situation.” Actually, the Europeans had done enough to raise questions in the minds of the world about the wisdom of having a single monetary policy with no coordinated fiscal policy.
The Europeans had already talked about a United States of Europe modeled after the United States of America, but with a more humane capitalism. The United States had no prototype for such a union of diverse regions, but EU had. It took more than a century of trial and error before the United States ended up with an Interstate Commerce Commission (ICC) that governed economic relations between states, a Federal Trade Commission, a Federal Reserves Bank with real power over money and credit, and a Supreme Court that could order the states to integrate education and educational facilities. Above all, it took a very nasty civil war before economically diverse states could experience a closing of the gap between the economically prosperous states and the “have not”
The economic differences between the Deep South and New England were perhaps greater than those between, let us say, Germany and Greece. However, in the former case, the central government, through taxation and expenditures was able to reduce, eliminate, or even reverse the trend. The rule “no bailout” may make microeconomic sense, but not necessarily macroeconomic sense. For example, at the end of World War II the United States economy was the only productive economy. The rest of the world was in ruins. It had demand for everything, but no dollars to buy. The American policy makers realized that their productive capacity could not be used in the absence of dollars or gold, two things that were concentrated in America. The Marshall Plan was the answer. Give the Europeans dollars so they can buy GM trucks that cannot be produced without employing those idled workers of Detroit. That was a bailout! But was it only the Europeans who were bailed out?
Over sixty percent of Greek imports of manufactured good originate in the eurozone. If the Greek, the Irish, the Portuguese and the Spanish economies go bankrupt who is going to buy the manufactures of the North? The streets of Athens are cluttered with German-made cars. Will the Greeks compete among themselves on buying those Audis, Mercedes etc?
Personally I am opposed to bailouts. However those debts were incurred in the past. Are we going to destroy European integration in order to satisfy German politicians? I hope not.
Lefteris N. Botsas, Ph.D.
Professor Emeritus
Oakland University
Rochester, Michigan, USA